JTH

This Blog is the start of a new series titled Tips & Tricks. Within this series I'll share some of the things I've learned that I feel give me an edge within the markets. Perhaps you've heard the old adage "Those who cannot remember the past are condemned to repeat it." It was written by a brilliant man named George Sanayana but as with most quotes, they always get paraphrased, so here's the real deal.

"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it."

So here's my point, you can't know where you're going if you don't know where you've been and how you got to the point you're at now, and that's why I monitor my performance daily. When I first started here back in 2007 I thought the S&P 500 was a NASCAR event, I was oblivious to the world of investing so I set out to educate myself and learn the trade. Now this isn't the all encompassing catch all tool, but it is one of the many tools needed to build a house on a strong foundation. The best tool you can use for your TSP account is located within this website and it's absolutely FREE! I'm talking about the TSP Returns Calculator located within the Utilities page.

What the Auto Tracker is to the forum, the TSP Returns Calculator is to the individual. This excel file is a masterful work of ingenuity and I can't thank Tom enough for offering it to us. I started using it in 2007 and at the time my excel skills were dreadful. I'd try and alter things and would jack up the whole file and have to start over again. But as time progressed I began to learn the basics and eventually was able to reverse engineer the file so I could learn how to learn. Now days almost everything I do is monitored, measured, and compared within Excel. As a side note: Openoffice is free and works equally well.

As with everything I do, I tinker until I get things the way I believe they work best for me. The picture below is the TSP Returns Calculator as I use it. The house is the same, I've just changed the carpet & drapes and added a pink flamingo.



So let's break down some of the things I monitor, and why. Posted below, the top left portion shows the current stats and the statistical edge I have over the other funds. This portion of the file is frozen, it doesn't move as I scroll down though my transactions. I do this so I can always know the most current info throughout the entire file. In the upper left corner where the blue and bright green columns are is my %tile edge over the other funds. With this I measure my performance against the markets, am I doing better or worse? If you want to beat the markets, you've got to gain over them, overtake them, but you need to measure this so you can evaluate these comparisons over time. When I leave the G-Fund I need to know what my edge was when I entered stocks. Look at the 26 Jan column, that was my last day in the G-Fund at that time, when I left the G-Fund I left with a -1.09% edge over the S-Fund. This meant I was under performing the markets and needed to get my edge back. As you look at the other columns, as I left the G-Fund I began to gain my edge back, this told me I"m on the right path. The last time I left the G-Fund on 5 May I had a 2.54% edge on the S-Fund. The next time I leave the G-Fund I want to have an edge greater than my last G-Fund exit. I hope you can understand the importance of gaining edges over the markets and more importantly monitoring and measuring those edges, it's CRUCIAL! The lower bright boxes represent my current returns and the current returns of the funds.




Another thing I do differently (far left column) is record a transaction every day the markets are open, regardless if I've made an IFT or not. This means I enter the share prices everyday, it might seem like a pain, but this gives me the ability to measure the subtle differences in the price action. Under the Allocations column I use the conditional formatting feature to color my allocations. Green is for 100%, Gold is for mixed allocations, and Grey is for allocations not used. This feature just makes it easier to scroll through and identify my positions.



Next columns are fairly self explanatory. Because I do a transaction everyday, I can measure my daily return on any given day, along with my yearly gain on that same day. The Avg Gains column measures my yearly returns divided by the number of transactions, to give me my average daily gain YTD. I try to keep that number as high as possible. The AT # column is my position on the Auto Tracker on any given day. I use this to measure my performance against others and make sure I'm "Keeping up with the Joneses." If I wanted to, I could go back and find a pivotal day when I fell down the tracker too fast and failed to correct my position.



Lastly we have the Daily, 5-Day, & 10-Day price performance of the funds, represented in %tile form. These measurements are taken from TSP share prices (not market prices) I use them as a visual way to quickly see what's going on. For instance, if you look at the 3 F-Fund columns you can see they are clearly outperforming the CSI-Funds over the 3 timeframes. Once again I use the conditional formatting feature to highlight performance, using colors. Green is above 0%, Red is below 0%, and Yellow is 0%.


Well hopefully you've gained some incite to what I monitor and why I monitor as much as I do. This is what works for me, hopefully you can use this to your advantage to gain an edge not only on the markets and the forum members, but most importantly to gain an edge on yourself.

Learn the trade...Jason